Billions needed to match EU funding for local communities after Brexit

Central government’s replacement for European structural funding after Brexit must be worth at least as much as the £8.4bn available in current period, the Local Government Association says.

The association has already campaigned successfully for the government to guarantee councils will have access to the full sum of European Union structural funding for the 2014-2020 period—worth €10.5bn (£8.4bn).

Today, the LGA has gone one step further in its demands, releasing a report which makes it clear that replacement funding for local authorities for growth and regeneration must not be fall below this amount from 2021.

The report said: “Clear guarantees to protect the full amount of this type of investment, to protect local regeneration plans, flagship infrastructure projects, employment and skills schemes and local growth in our communities, is now essential, alongside rapid transition.

“The successor arrangements must also incorporate the principles of additionality and complementarity to ensure the investment is delivering impact, and not simply plugging gaps in provision.”

The Conservative manifesto earlier this year promised the government would use structural fund money that comes back to the UK following Brexit to create a UK “shared prosperity fund”.

However, deep concerns have been voiced about the replacement of EU structural funding. This week, Humber Local Enterprise Partnership chairman Lord Haskins aired doubts about the scale of the proposed fund.

He told the Hull Daily Mail that “so far, there is no indication it will match the sort of money we are currently getting from Europe”.

He added: “Long-term, I think we will have to start looking at other sources of funding for vital infrastructure work.”

Distribution

The LGA also wants a new approach to distributing Westminster money that replaces EU regional aid, calling for a “single pot” for all domestic growth funding.

The association outlined three options for the future of funding currently sourced from the European Union. Its preferred method would see European Union structural funding, all other European funding streams and 70 UK funding streams supporting growth and regeneration pooled together.

The document said: “Under the single pot principle, local areas would be afforded maximum flexibility to target need and tailor provision, to stimulate growth in local areas and contribute to the national economy .”

The pot would be most effectively distributed to regional “functional economic areas” (FEAs) in England, and “appropriately identified” bodies in the devolved nations, the report said.

“In England, the FEAs could arguably follow the funding distribution geography of the current European Structural and Investment Funds (ESIF) programme,” the report added. It argued this would offer “much greater control over funding decisions , which would be devolved to all local areas.”

The single pot could, the LGA suggested, merge the local strands of the European Social Fund and the European Regional Development Fund, plus the development parts of the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund.

In addition, it would include other European funds sitting outside of structural funding.

“For example,” the report said, “alongside structural funds , many local communities also currently benefit from UK participation in a range of smaller European funding programmes, such as Horizon 2020, Interreg, LEADER programmes and the Erasmus.”

Integration

In addition, independent research commissioned by the LGA revealed that over £23.5bn of identified spending on supporting growth and regeneration is spread across 70 funding streams, managed by 22 government departments and agencies, each with different objectives, timetables and rules.

The research suggested integrating separate funding programmes into a single pot would “simplify funding allocation processes, limit the duplication and bureaucracy of multiple bidding processes and free up time and resources”.

The option to create a regional aid structure mirroring the current ESIF regime in terms of structure, value and allocation timescales, was rejected by the report which said it would “lock local areas into restrictive and ultimately fragmented funding arrangements at a time when central government should be seeking opportunities to devolve powers to local communities through local government.”

The LGA also mooted a less ambitious version of the single pot, restricted to structural funding only.

Kevin Bentley, chairman of the LGA’s Brexit Task and Finish Group, said: “Securing a government commitment around this vital regeneration funding has been an important step. To further its devolution commitments, we want to work with the government to help develop a fully-funded and locally-driven successor scheme with local government in areas of all types.”

He said that any new arrangements must retain the current long-term distribution of ESIF funds, which are allocated over seven-year periods.

“Funding must be easier to access and local areas need full control over how it is spent and what projects it is spent on,” he said.

“With national funding for regeneration increasingly being depleted, all local areas have become increasingly reliant on EU money and local areas are desperate to get on with creating jobs, building infrastructure and boosting growth.”